Would raising the minimum wage push some workers over the ‘cliff?’

Politicians have suggested that too high a wage would endanger benefits eligibility

During the 2014 race for Oregon governor, incumbent John Kitzhaber supported raising the minimum wage above the upcoming January bump, when the wage will go to $9.25 per hour from the current $9.10. But he warned that raising it too high could cause some low-income workers to lose eligibility for state benefits. Republican challenger Dennis Richardson criticized attempts to raise the minimum wage further, saying that the focus should be on creating more higher-paying jobs in Oregon.

But what effect would a higher minimum wage have on those eligible for benefits such as the Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families and Employment Related Day Care? Kitzhaber has suggested that $11 per hour would be ideal, while the Oregon School Employees Association recently proposed a minimum wage of $15.

The current federal minimum wage is $7.25 per hour, but President Barack Obama and congressional Democrats have proposed raising that to $10.10.

According to Debbie Meadows, program analyst for the state Department of Human Services Self Sufficiency Program for Deschutes, Jefferson and Crook counties, any state assistance program eligibility requirements are tied to the federal poverty guidelines, a measure used by the U.S. Department of Health and Human Services to determine eligibility for such programs. The guidelines are derived from the official poverty line as defined by the U.S. Census Bureau. The 2014 federal poverty guideline for a family of four is $23,850 per year, or about $1,972 per month.

A person earning Oregon’s minimum wage would currently earn about $1,565 per month, or about $1,591 in January when the hourly wage goes up.

Doing the math: Meet Ramona

Let’s imagine Ramona, a single mom with three young children who need day care while Ramona works for minimum wage at a restaurant in Bend. She currently qualifies for SNAP benefits, and ERDC helps with her kids. She doesn’t qualify for TANF because she works full time. These scenarios were derived from information provided by and conversations with Meadows.

Supplemental Nutrition Assistance Program

SNAP benefits, or food stamps, are provided to low-income families to ensure they are getting enough food. When Oregon’s minimum wage increases to $9.25 in January, Ramona would earn a gross income of about $1,591 per month. In Oregon, a household can earn up to 185 percent of the current federal poverty guideline, about $3,677 per month, and still qualify for SNAP, according to Meadows. With deductions for housing expenses and utilities, Ramona’s family would qualify for $463 per month in SNAP benefits.

If Ramona’s hourly wage increased further, her SNAP benefit amount would go down. At the current federal poverty guideline and with existing requirements, Ramona would have to earn more than $21 per hour before she would be ineligible for SNAP.

Employment Related Day Care

Ramona meets the requirements for day care assistance. Although she receives assistance, the ERDC program requires Ramona to pay a $114 monthly co-pay, according to Meadows. This is based on Ramona’s family size of one adult and three children and her current income. As Ramona’s income increased, so would her co-pay. If Ramona earned $21 per hour, her co-pay would be about $850, and she would become ineligible for the program once her wage reached about $21.37 per hour.

Temporary Assistance for Needy Families

Because Ramona works full-time, she doesn’t currently qualify for TANF. But let’s suppose that Ramona suddenly loses her job. To qualify for TANF benefits, she must apply for unemployment and be denied. She could qualify for $621 per month in TANF benefits while she’s looking for a new job. She can even work some and still qualify, although as her earnings increase, her TANF benefits go down. At about $1,000 per month, she no longer qualifies at all. Eventually, Ramona is able to find another full-time job and she stops receiving TANF benefits. Less than 1 percent of Central Oregonians currently receive TANF.

Conclusion

These are just three of the programs offered by the Oregon Department of Human Services. The eligibility for most programs is not tied just to earnings, but it’s clear that the current minimum wage and the increase scheduled for January would not affect most people’s eligibility for these programs.